How Do I Calculate My Crypto Gains and Losses

Introduction

In the UK, cryptocurrency is treated as a capital asset, similar to shares. That means you are taxed on the profit (gain) when you sell, exchange, or spend crypto, not when you simply buy or hold it.

You only pay tax on the overall gain for the tax year once your profits exceed the annual CGT allowance, which is £3,000 for the 2024 25 tax year. If you make a loss, you can use it to offset other crypto or investment gains.

When you need to calculate gains and losses

You must calculate your gain or loss each time you:

Sell cryptocurrency for fiat currency (such as pounds).

Swap one crypto asset for another (for example, Bitcoin for Ethereum).

Spend crypto on goods or services.

Gift crypto to someone other than your spouse or civil partner.

These transactions are called disposals. Moving crypto between wallets you own is not a disposal and therefore not taxable, but you should still record it for tracking purposes.

Step 1: Determine your disposal value

The disposal value is how much your crypto was worth in pounds sterling when you sold, exchanged, or spent it.

If you sold crypto for cash, use the sale price in pounds.

If you swapped crypto for another token, use the market value in pounds at the time of the exchange.

If you used crypto to buy something, use the value of the item in pounds.

Example

If you sell 1 Bitcoin for £40,000, your disposal value is £40,000. If you instead exchange it for Ethereum worth £40,000, that is still your disposal value.

Step 2: Work out your cost basis

The cost basis (sometimes called the acquisition cost) is what you originally paid for the crypto, plus any allowable costs such as transaction or network fees.

If you bought 1 Bitcoin for £20,000 and paid £100 in exchange fees, your total cost basis is £20,100.

The gain is then:
£40,000 (sale) £20,100 (cost) = £19,900 gain.

If your sale price is lower than your cost basis, you make a loss instead.

Step 3: Use HMRC’s share pooling rules

Because cryptocurrency is treated like shares, HMRC uses share pooling to calculate your cost basis when you have multiple purchases of the same token. This means all your purchases of the same crypto are grouped together into an “asset pool” with an average cost.

When you dispose of part of your holdings, you calculate your gain or loss based on the average pooled cost.

Example

You buy 2 Ethereum at £1,000 each, then another 2 Ethereum at £1,500 each.
Your total holding is 4 Ethereum with a total cost of £5,000 (£1,000 + £1,000 + £1,500 + £1,500).
Your average cost per Ethereum is £1,250.

If you sell 2 Ethereum for £3,000 total, your gain is £3,000 (£1,250 × 2) = £500.

Pooling continues until you dispose of all your holdings in that particular crypto.

Step 4: Apply the “same day” and “30-day” rules

HMRC also applies special matching rules to prevent tax avoidance through rapid trades. When you dispose of crypto, you must match it with acquisitions in this order:

Crypto bought on the same day as the sale.

Crypto bought within 30 days after the sale (the “bed and breakfast” rule).

The remaining crypto in your pooled holdings.

Example

You sell 1 Bitcoin on 1 June for £30,000.
You then buy 1 Bitcoin on 10 June for £25,000.
Under the 30-day rule, the sale is matched with this later purchase, so your gain is £30,000 £25,000 = £5,000.

If you do not buy more Bitcoin within 30 days, the sale is matched against your existing Bitcoin pool instead.

Step 5: Add up your total gains and losses

At the end of the tax year, you must calculate your total gains and total losses across all crypto transactions.

If your total gains are below £3,000, you do not owe CGT.

If they exceed £3,000, you pay tax on the portion above that threshold.

If you have losses, you can report them to HMRC and use them to offset gains either in the same year or in future years.

Example

Gain from Bitcoin sale: £5,000.

Loss from Ethereum trade: £2,000.

Net gain: £3,000.

If this is within the CGT allowance, no tax is due.

Step 6: Calculate your tax rate

Once your gains exceed the annual allowance, you pay Capital Gains Tax based on your income tax band:

10 percent for basic rate taxpayers.

20 percent for higher and additional rate taxpayers.

Crypto gains are added to your total taxable income to determine your tax band.

Example

If your salary is £45,000 and you have £10,000 in crypto gains, part of your gain may fall into the higher rate band, meaning you pay 10 percent on some and 20 percent on the rest.

Step 7: Report your gains to HMRC

If you owe tax, report your crypto gains on your Self Assessment tax return using the Capital Gains Summary (SA108) section. Alternatively, you can report them using HMRC’s real-time Capital Gains Tax service.

The deadline for reporting and paying CGT is 31 January following the end of the tax year.

If you do not usually file a tax return but need to declare crypto gains, register with HMRC by 5 October after the tax year in which you made the gains.

Record keeping

HMRC requires detailed records for every crypto transaction. You must keep:

The type and quantity of crypto bought and sold.

Dates of each transaction.

The value in pounds at each stage.

Transaction and network fees.

Wallet addresses and exchange details.

Records should be kept for at least five years after the Self Assessment deadline.

Accurate records make it easier to calculate gains correctly and defend your figures if HMRC reviews your return.

Example scenario

Tom buys 5 Litecoin for £1,000 each (£5,000 total) and later buys 3 more for £1,200 each (£3,600 total). His average pooled cost is £8,600 ÷ 8 = £1,075 per coin.

He sells 4 Litecoin for £6,000 in total.
His cost for those 4 coins is £1,075 × 4 = £4,300.
His gain is £6,000 £4,300 = £1,700.

If his total annual gains from all crypto are below £3,000, he owes no tax.

Common mistakes to avoid

Forgetting to include exchange and transaction fees in your cost basis.

Ignoring the same day and 30-day matching rules.

Misreporting wallet transfers as disposals.

Failing to keep records in pounds sterling.

Using different cost calculation methods instead of HMRC’s pooling rules.

Conclusion

Calculating your crypto gains and losses correctly is essential to staying compliant with HMRC. You must determine your disposal value, cost basis, and apply pooling and matching rules for each transaction. Only your net gains above the annual CGT allowance are taxable.

Keeping accurate records, converting all figures to pounds, and understanding HMRC’s cost rules will help ensure your crypto tax calculations are correct. For complex portfolios or frequent trades, consider using crypto tax software or working with an accountant experienced in digital asset taxation.